General
Dynamics to Acquire Three Units of GTE Government Systems for $1.05 Billion

FALLS CHURCH, Va. -- General
Dynamics (NYSE: GD) and GTE Corporation (NYSE: GTE) announced today that they have entered
into a definitive agreement for General Dynamics to acquire three units of GTEs
Government Systems organization for $1.05 billion in cash.

The transaction has been approved by the boards
of directors of both companies and is subject to normal regulatory approvals. General
Dynamics will assume no GTE debt in the transaction. The acquisition will be treated for
tax and accounting purposes as an asset purchase and is expected to close within 60 days.
The acquisition will be immediately accretive to General Dynamics earnings.

GTE Government Systems is a leader in the
advancement of command, control, communications and intelligence systems; electronic
defense systems, communication switching; and information systems for defense, government,
and industry in the United States and abroad. Included in the purchase are the
Communication Systems Division in Taunton, Massachusetts; Worldwide Telecommunications
Services in Needham Heights, Massachusetts; and Electronic Systems Division in Mountain
View, California. Together, these units have a backlog of $900 million, approximately
6,200employees, and expect to have 1999 revenues of approximately $1.2billion.

When the transaction closes, these units will be
part of General Dynamics Information Systems and Technology business group.

"This is a solid addition to our defense
core and a superb strategic fit," said Nicholas D. Chabraja, General Dynamics
chairman and chief executive officer. "We formed the Information Systems and
Technology group in 1998 from a series of acquisitions. Anticipated 1999 revenues for the
group had been estimated at $1 billion. With this acquisition, we more than double the
size of the group, and tremendously expand its capabilities. The Government Systems
organization gives us world-class information assurance, land communication and networking
capabilities. It strengthens our signal processing, applications and decision support
capabilities, and creates a world wide information systems support and services
organization," Chabraja said. "We are committed to our defense customers and see
significant growth opportunities in the defense electronics market. We believe this
transaction provides strong career opportunities and a good corporate home to the fine GTE
employees who have made their organization so successful."

GTE Chairman and CEO Charles R. Lee said,
"GTE Government Systems has been a central part of GTEs heritage, and a major
contributor to our success. It is gratifying that one of the defense industrys most
prominent and highly regarded companies, General Dynamics, recognizes the talent and
creativity of this outstanding team. At the same time, this transaction is important to
GTE as we focus on our core telecommunications services and reposition ourselves for
future growth."

The transaction is the most recent in GTEs
previously announced initiative to sell non-core business assets to generate more than $3
billion in after-tax proceeds. On May 27, GTE announced reaching agreements to sell
wireline properties in Alaska to the Alaska Telephone Exchange Acquisition Corporation,
Inc. (ATEAC) and in Arizona, California and Minnesota to Citizens Utilities. Proceeds from
the sale of GTEs Government Systems unit and wireline properties will be used to pay
off debt that will be incurred with GTEs pending purchase of Ameritech wireless
properties in Illinois and Missouri, and to invest in future high-growth strategic
initiatives.

General Dynamics, headquartered in Falls Church,
Virginia, supplies sophisticated defense systems and services to the United States
government and its allies around the world. The company employs 30,800 people and had 1998
sales of approximately $5 billion.

GTE Corporation, based in Irving, Texas, is a
leading telecommunications provider with one of the industrys broadest arrays of
products and services. The company has 120,000employees and had 1998 sales
of more than $25 billion.